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Frozen Yogurts in China: Niche market or Next Trend to Catch?

CHINA - Its not just dairy that is growing in China - its healthy dairy.

Market research organisation Daxue Consulting serves multinational and SMEs, with a strong presence in the Chinese market and has noted progress in yoghurt demand.

This is the message of consultant Adrian Masson, who writes about the importance of branding, a fact not lost on many of China's main suppliers.

Yogurts in China

The Chinese population is searching for better quality of life as their income and country development is improving, writes Adrian.

Adrian Masson writes that Chinese yoghurt demand is growing 30 per cent per year

Lately, consumers are paying greater attention to their well-being and healthy food is becoming increasingly popular. Therefore dairy products are gaining popularity in China’s market and the Yogurt market is leading the way.

While the global growth rate of yogurt consumption has been expanding at a rate of 20 per cent annually, the market increases on an annual rate of 30 per cent in China.

The most successful products are the flavoured yogurt drinks that are progressing over 40 per cent.

Why is the Chinese market so attractive to foreign and local frozen yogurt stores?

And why are those products so successful in China?

China: Target of International Frozen Yogurts Brands

Throughout the 1800s, significant technological improvements enabled to simplify frozen yogurts preparation. Since, frozen yogurts have become a refreshing, tangy dessert combining many flavours and textures.

Its success is especially thanks to strong marketing campaigns promoting the desert as a low in fat and healthy because it contains lactobacillus and all the nutrients of milk, essential for a strong immune system. Frozen yogurt isn’t completely frozen but simply contains ice crystals; the primary ingredient is milk and milk products, sugar accounts for about 15 per cent of the ingredients and the strains of bacteria makes up about 1 per cent.

The frozen yogurt is a relative newcomer in the desert market, and its popularity is attributed to its capacity to let customers experiment new combinations with toppings of their choice. Frozen yogurt stores offer new experiences and are giving the freedom to customers to have fun or to be creative by serving themselves in a bright colourful and user-friendly environment. Most commonly yogurts are then charged by number of servings or by weight. Currently stores styles are mostly self-service and are quite similar.

Many international brands are already targeting the Chinese market, to benefit from new entrant advantages. Last year many frozen yogurts already flourished and are enjoying great returns. According to Amit Kleinberger, CEO of Menchie’s Frozen Yogurt, “As we continue to expand internationally, we know opening a location in the rapidly developing Chinese market is an important step for our brand” and will be positioning itself over the concept of “spreading smiles to our international fans”.

Experimentation: New toppings can be added to yoghurt - a major positive for consumers

The brand will be offering a mobile game for consumers to play with on their phones that will promote the image of “healthy, California, happy cows” and ensure all guests have fun in the store. The strategy appears to be perfectly adapted to the Chinese market, intensive users of mobile phones and increasingly caring about health. Fro-Yo is also entering the market with strong marketing support, the brand will be putting forwards its cool, creamy frozen dessert, that won’t harm fitness. Fro-Yo is entering the market with some maturity from the US and will be performing under franchises to increase creativity.

Last year, Orange Leaf chose to franchise with Chinese investors and opened their first two stores in Shanghai. In the coming years, the company will thrive to open a hundred stores across China, Hong Kong, Taiwan and Macau. In order to implement itself in the Chinese market, Orange Leaf Frozen Yogurts’ CEO says, “We have been working diligently to identify the right local partners to spearhead our effort in China.” The idea will be to develop specific Asian flavours and additional toppings according to the Chinese tastes. Orange Leaf is confident with their decision, as self-service and customizations is demanded by the Chinese.

Frozen yogurts are however controversial. Companies are intensively marketing their products as low in fat and healthy but opponents have been criticising. Yogurts may contain low fat and have fewer calories than ice creams but some of them contain more sugar. In addition, others claim that the beloved probiotics of frozen yogurts is lost during the commercial processing and nutrients such as calcium and vitamins concentration becomes very low.

Turning New Combination into New Opportunities

As seen previously, international chains are entering the Chinese market and have large expansion plans. However, many frozen yogurt chains are nearly indistinguishable from one another. The Chinese consumer enjoys diversity and is looking for new consumption experiences. Original designs, delivering services differently and rethinking concepts are real opportunities for international brands. The flavouring, colouring, texture, freezing, packaging must all be thought intensively and proper research must be performed to deliver an optimal arrangement for the clients.

Delivering unique experiences may represent the best advantage in the market. The location of the store must of course also be taken into account seriously as frozen yogurt are summer-friendly. Factors to be considered before electing a location are the competition, proximity of a college or a campus or health focused residence, as they will be the largest consumers of the healthy new desert trend.

Will Frozen Yogurts Replace Ice Creams?

The rise of this new frozen dessert is threatening the ice cream market because they are healthier, more fun and trendy. Ice creams are responding by rolling out new offerings and suggesting more customizability to their products to embrace the trend.

Ice cream stores are following the movement of local tastes, artisan quality, and healthier options such as low fast ice creams in China. For example Haagen Dazs is maintaining its very high prices and will continue benefiting from its great reputation across China. Eventually, the sales of ice cream can even benefit from the frozen yogurt trend as it will extend the acceptation of desert stores in China.

The frozen yogurt future is bounded to great success in the Chinese market and will take many innovating forms. The search for low fat healthy food will encourage people to spend more for those products. And technology improvements will enhance profitability, quality and consumer satisfaction on the long run.